George Wright keeps his eye on emerging technology trends and figures out how they impact life and business.

Last week at the Smart Services CRC partner conference (of which Fairfax Media is a participant) the keynote address was delivered by VRML co-creator Mark Pesce. The theme of the talk was “Hyper Business Basics”.

Pesce introduced the scenario of coconut pickers on tropical islands. Falling coconuts are a real public danger causing injury and even deaths and therefore as the fruit ripens, coconut picking tradesmen are called in to remove the fruit and reduce potential for harm.

A good coconut picker spends their time up trees and therefore finding them around the villages can be difficult, often it relies on word of mouth. The introduction of mobile phones meant that the tradesmen were able to take bookings even while up a tree. Those with the technology started to get more work, those without it started to struggle to find work. Within weeks the mobile phone was an essential tool for the trade.

The coconut pickers were able to take on more work since less time was spent seeking leads. Before long, enterprising coconut pickers were using their phones to receive text messages with current market prices for coconuts and were creating cooperatives to sell to coconut processing and exporting businesses. These local coconut collectives were now able to compete with traditional plantations.

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Throughout history we can see many instances of this organisational pattern of aggregating human labor to create larger and more stable supply chains. The coconut example is a great modern agrarian example of how technology can be used to create disruptive businesses.

Half way across the world, personal and always connected smartphones are aggregating individuals to challenge incumbents. According to Pesce meta hire car company Uber has marshalled private limousine operators into a virtual vehicle fleet which has displaced established San Francisco cab businesses. Similar smartphone app businesses, such as goCatch, have been spawned in Australia.

There is now an ability to co-ordinate distributed human capital without creating expensive and custom infrastructure through using every day devices and services that are easily and widely available. This access to resources has proven to be essential to young web businesses that are innovating bypassing the need for big capital investments to achieve their desired services. Creatively combining cloud technologies, on demand service providers and open source solutions allow these micro-multinationals to present to the market at a scale comparable to many of the bigger brands that are now only embracing the web.

This ability to pick and choose from a wide range of discrete and relatively cheap services means that these businesses can iterate quickly, can change providers to leverage better deals or capability and expand and migrate into different regions with relative ease. To quote Pesce “the sales channel of the future is the API not the handshake.”

Pesce’s story is not just about new entrants, established web businesses can look to Amazon.com to see how it aligned its business into a whole range of services which they use internally and offer externally.

Amazon Web Services (AWS) is an example where providing application programming interfaces (APIs) for services that are essential to their business but where excess capacity exists, they have in fact become an entire new class of products. Success of smaller start-ups that leverage AWS services is success for Amazon too.

The crux of Pesce’s keynote could be summarised that all businesses, new and old, should periodically review the following points.

What resources can now be aggregated? In his example, smartphones can help effectively marshal human capital such as airtasker.com.au.

What existing business processes can be recomposed into discrete services which could become their own source of revenue?

What new services can be developed through a different combination of the two?

The development of the next generation of web businesses will be where service aggregation intersects with deconstructed business models. While success is not guaranteed there does seem to be a prevailing trend towards a services model that utilises a wide variety of third-party systems and iterate quickly to find their place in the digital market.

For me, the fascinating part is watching these web based businesses grow. I love to see the way that new business model approaches and traditional corporate functions can be recombined to provide new interpretations on classic consumer wants and needs.

4 comments so far

I liked the bit at the beginning...about the coconuts....He kinda lost me too after that!

Commenter

coconuts

Location

Date and time

August 27, 2012, 6:40PM

I understood it...but in the way that it explains what is happening retrospectively. It doesn't really help an entrepreneur to think "Today I am going to build a next generation web businesses where service aggregation intersects with deconstructed business models".

They think "oh wow thats a sweet idea, I wonder if I can make something of it"

Commenter

wooandwow

Location

Canberra

Date and time

August 27, 2012, 7:43PM

I agree entirely. I'm an indie game developer and my first mobile game, Animals Ahoy, was created using the methods you described. I don't have a physical studio with a permanent team on the payroll.

I have a virtual, distributed studio with service providers hired on a project-basis all around the world. We use cloud technologies to develop and store our assets and all software is either free or open source to reduce overheads. The value-add is in the concept and the design, not the expensive production. After all, it's Apple's key to success.

In my opinion, the quality of my game is every bit as good as the large production houses. And I did this at a fraction of the cost of more 'traditional' methods.